UPDATE 3-Kansas City Southern's profit tops Wall St view, shares up

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(Adds context on Mexico trade)

July 20 (Reuters) - Kansas City Southern, a regional U.S. railroad operator with extensive operations in Mexico, topped Wall Street estimates for quarterly profit on Friday, as it transported higher volumes of petroleum, cars and chemicals.

Shares gained 1.1 percent to $109.67 in afternoon trading, even after the company lowered its full-year volume growth forecast due to weaker-than-expected overall volume growth of 1 percent in the second quarter.

Kansas City Southern now sees 2018 volume growth of approximately 3 percent to 4 percent versus its previous call for a mid-single-digit percentage rise.

"As we move into the second half of 2018 and 2019, we expect volume growth to accelerate," Chief Executive Officer Patrick Ottensmeyer said in a statement.

Kansas City Southern's operating ratio marginally increased to 64 percent from a year earlier. Operating ratio measures operating costs as a percentage of revenue and is a closely watched gauge of railroad performance. Lowering that ratio improves profitability.

Net income available to shareholders rose more than 10 percent to $148.2 million, or $1.45 per share, helped by higher volumes for petroleum, autos and chemicals.

On an adjusted basis, the company earned $1.54 per share, beating analysts' estimate of $1.51, according to Thomson Reuters I/B/E/S.

Kansas City Southern dominates cross-border rail trade between the United States and Mexico and draws about 30 percent of its revenue from U.S.-Mexico shipments.

U.S. President Donald Trump on Wednesday said he wants to hammer out a trade deal with Mexico, and then do a separate one with Canada, sowing fresh doubts about the future of the North American Free Trade Agreement (NAFTA).

Trump pledged during his election campaign to revamp the 24-year-old NAFTA trade deal between the United States, Canada and Mexico, which he has called a disaster for the United States.

Mexico's President-elect Andres Manuel Lopez Obrador has said that he wants a good relationship with the United States.

Kansas City Southern executives on Friday said they are closely monitoring the situation. (Reporting by Lisa Baertlein Additional reporting by Arunima Banerjee in Bengaluru; Editing by Jonathan Oatis and Phil Berlowitz)